EN BANC

[G.R. No. 117040. January 27, 2000]

RUBEN SERRANO, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION and ISETANN DEPARTMENT STORE, respondents.
DECISION
MENDOZA, J.:
This is a petition seeking review of the resolutions, dated March 30, 1994 and August 26, 1994, of the National Labor Relations Commission (NLRC)
which reversed the decision of the Labor Arbiter and dismissed petitioner Ruben Serranos complaint for illegal dismissal and denied his motion for
reconsideration. The facts are as follows:
Petitioner was hired by private respondent Isetann Department Store as a security checker to apprehend shoplifters and prevent pilferage of merchandise.
[1] Initially hired on October 4, 1984 on contractual basis, petitioner eventually became a regular employee on April 4, 1985. In 1988, he became head of
the Security Checkers Section of private respondent.[2]
Sometime in 1991, as a cost-cutting measure, private respondent decided to phase out its entire security section and engage the services of an independent
security agency. For this reason, it wrote petitioner the following memorandum:[3]
October 11, 1991
MR. RUBEN SERRANO
PRESENT
Dear Mr. Serrano,
......In view of the retrenchment program of the company, we hereby reiterate our verbal notice to you of your termination as Security
Section Head effective October 11, 1991.
......Please secure your clearance from this office.
Very truly yours,
[Sgd.] TERESITA A. VILLANUEVA
Human Resources Division Manager
The loss of his employment prompted petitioner to file a complaint on December 3, 1991 for illegal dismissal, illegal layoff, unfair labor practice,
underpayment of wages, and nonpayment of salary and overtime pay.[4]
The parties were required to submit their position papers, on the basis of which the Labor Arbiter defined the issues as follows:[5]
Whether or not there is a valid ground for the dismissal of the complainant.
Whether or not complainant is entitled to his monetary claims for underpayment of wages, nonpayment of salaries, 13th month pay
for 1991 and overtime pay.
Whether or not Respondent is guilty of unfair labor practice.
Thereafter, the case was heard. On April 30, 1993, the Labor Arbiter rendered a decision finding petitioner to have been illegally dismissed. He ruled that
private respondent failed to establish that it had retrenched its security section to prevent or minimize losses to its business; that private respondent failed to
accord due process to petitioner; that private respondent failed to use reasonable standards in selecting employees whose employment would be terminated;
that private respondent had not shown that petitioner and other employees in the security section were so inefficient so as to justify their replacement by a
security agency, or that "cost-saving devices [such as] secret video cameras (to monitor and prevent shoplifting) and secret code tags on the merchandise"
could not have been employed; instead, the day after petitioners dismissal, private respondent employed a safety and security supervisor with duties and
functions similar to those of petitioner.
Accordingly, the Labor Arbiter ordered:[6]
WHEREFORE, above premises considered, judgment is hereby decreed:
(a)......Finding the dismissal of the complainant to be illegal and concomitantly, Respondent is ordered to pay
complainant full backwages without qualification or deduction in the amount of P74,740.00 from the time of
his dismissal until reinstatement (computed till promulgation only) based on his monthly salary of
P4,040.00/month at the time of his termination but limited to (3) three years;
(b)......Ordering the Respondent to immediately reinstate the complainant to his former position as security
section head or to a reasonably equivalent supervisorial position in charges of security without loss of
seniority rights, privileges and benefits. This order is immediately executory even pending appeal;
(c)......Ordering the Respondent to pay complainant unpaid wages in the amount of P2,020.73 and
proportionate 13th month pay in the amount of P3,198.30;
(d)......Ordering the Respondent to pay complainant the amount of P7,995.91, representing 10% attorneys fees
based on the total judgment award of P79,959.12.
All other claims of the complainant whether monetary or otherwise is hereby dismissed for lack of merit.
SO ORDERED.
Private respondent appealed to the NLRC which, in its resolution of March 30, 1994, reversed the decision of the Labor Arbiter and ordered petitioner to be
given separation pay equivalent to one month pay for every year of service, unpaid salary, and proportionate 13th month pay. Petitioner filed a motion for

reconsideration, but his motion was denied.

The NLRC held that the phase-out of private respondents security section and the hiring of an independent security agency constituted an exercise by
private respondent of "[a] legitimate business decision whose wisdom we do not intend to inquire into and for which we cannot substitute our judgment";
that the distinction made by the Labor Arbiter between "retrenchment" and the employment of "cost-saving devices" under Art. 283 of the Labor Code was
insignificant because the company official who wrote the dismissal letter apparently used the term "retrenchment" in its "plain and ordinary sense: to layoff
or remove from ones job, regardless of the reason therefor"; that the rule of "reasonable criteria" in the selection of the employees to be retrenched did not
apply because all positions in the security section had been abolished; and that the appointment of a safety and security supervisor referred to by petitioner
to prove bad faith on private respondents part was of no moment because the position had long been in existence and was separate from petitioners position
as head of the Security Checkers Section.
Hence this petition. Petitioner raises the following issue:
IS THE HIRING OF AN INDEPENDENT SECURITY AGENCY BY THE PRIVATE RESPONDENT TO REPLACE ITS
CURRENT SECURITY SECTION A VALID GROUND FOR THE DISMISSAL OF THE EMPLOYEES CLASSED UNDER THE
LATTER?[7]
Petitioner contends that abolition of private respondents Security Checkers Section and the employment of an independent security agency do not fall
under any of the authorized causes for dismissal under Art. 283 of the Labor Code.
Petitioner Laid Off for Cause
Petitioners contention has no merit. Art. 283 provides:
Closure of establishment and reduction of personnel. - The employer may also terminate the employment of any employee due to the
installation of labor-saving devices, redundancy, retrenchment to prevent losses or the closing or cessation of operations of the
establishment or undertaking unless the closing is for the purpose of circumventing the provisions of this Title, by serving a written
notice on the workers and the Department of Labor and Employment at least one (1) month before the intended date thereof. In case
of termination due to the installation of labor-saving devices or redundancy, the worker affected thereby shall be entitled to a
separation pay equivalent to at least one (1) month pay or to at least one (1) month pay for every year of service, whichever is higher.
In case of retrenchment to prevent losses and in cases of closure or cessation of operations of establishment or undertaking not due
to serious business losses or financial reverses, the separation pay shall be equivalent to at least one (1) month pay or at least onehalf (1/2) month pay for every year of service, whichever is higher. A fraction of at least six (6) months shall be considered as one
(1) whole year.
In De Ocampo v. National Labor Relations Commission,[8] this Court upheld the termination of employment of three mechanics in a transportation
company and their replacement by a company rendering maintenance and repair services. It held:
In contracting the services of Gemac Machineries, as part of the companys cost-saving program, the services rendered by the
mechanics became redundant and superfluous, and therefore properly terminable. The company merely exercised its business
judgment or management prerogative. And in the absence of any proof that the management abused its discretion or acted in a
malicious or arbitrary manner, the court will not interfere with the exercise of such prerogative.[9]
In Asian Alcohol Corporation v. National Labor Relations Commission,[10] the Court likewise upheld the termination of employment of water pump
tenders and their replacement by independent contractors. It ruled that an employers good faith in implementing a redundancy program is not necessarily
put in doubt by the availment of the services of an independent contractor to replace the services of the terminated employees to promote economy and
efficiency.
Indeed, as we pointed out in another case, the "[management of a company] cannot be denied the faculty of promoting efficiency and attaining economy by
a study of what units are essential for its operation. To it belongs the ultimate determination of whether services should be performed by its personnel or
contracted to outside agencies . . . [While there] should be mutual consultation, eventually deference is to be paid to what management decides." [11]
Consequently, absent proof that management acted in a malicious or arbitrary manner, the Court will not interfere with the exercise of judgment by an
employer.[12]
In the case at bar, we have only the bare assertion of petitioner that, in abolishing the security section, private respondents real purpose was to avoid
payment to the security checkers of the wage increases provided in the collective bargaining agreement approved in 1990.[13] Such an assertion is not a
sufficient basis for concluding that the termination of petitioners employment was not a bona fide decision of management to obtain reasonable return from
its investment, which is a right guaranteed to employers under the Constitution.[14] Indeed, that the phase-out of the security section constituted a
"legitimate business decision" is a factual finding of an administrative agency which must be accorded respect and even finality by this Court since nothing
can be found in the record which fairly detracts from such finding.[15]
Accordingly, we hold that the termination of petitioners services was for an authorized cause, i.e., redundancy. Hence, pursuant to Art. 283 of the Labor
Code, petitioner should be given separation pay at the rate of one month pay for every year of service.
Sanctions for Violations of the Notice Requirement
Art. 283 also provides that to terminate the employment of an employee for any of the authorized causes the employer must serve "a written notice on the
workers and the Department of Labor and Employment at least one (1) month before the intended date thereof." In the case at bar, petitioner was given a
notice of termination on October 11, 1991. On the same day, his services were terminated. He was thus denied his right to be given written notice before
the termination of his employment, and the question is the appropriate sanction for the violation of petitioners right.
To be sure, this is not the first time this question has arisen. In Sebuguero v. NLRC,[16] workers in a garment factory were temporarily laid off due to the
cancellation of orders and a garment embargo. The Labor Arbiter found that the workers had been illegally dismissed and ordered the company to pay
separation pay and backwages. The NLRC, on the other hand, found that this was a case of retrenchment due to business losses and ordered the payment of
separation pay without backwages. This Court sustained the NLRCs finding. However, as the company did not comply with the 30-day written notice in
Art. 283 of the Labor Code, the Court ordered the employer to pay the workers P2,000.00 each as indemnity.
The decision followed the ruling in several cases involving dismissals which, although based on any of the just causes under Art. 282,[17] were effected
without notice and hearing to the employee as required by the implementing rules.[18] As this Court said: "It is now settled that where the dismissal of one

employee is in fact for a just and valid cause and is so proven to be but he is not accorded his right to due process, i.e., he was not furnished the twin
requirements of notice and opportunity to be heard, the dismissal shall be upheld but the employer must be sanctioned for non-compliance with the
requirements of, or for failure to observe, due process."[19]
The rule reversed a long standing policy theretofore followed that even though the dismissal is based on a just cause or the termination of employment is
for an authorized cause, the dismissal or termination is illegal if effected without notice to the employee. The shift in doctrine took place in 1989 in
Wenphil Corp. v. NLRC.[20] In announcing the change, this Court said:[21]
The Court holds that the policy of ordering the reinstatement to the service of an employee without loss of seniority and the payment
of his wages during the period of his separation until his actual reinstatement but not exceeding three (3) years without qualification
or deduction, when it appears he was not afforded due process, although his dismissal was found to be for just and authorized cause
in an appropriate proceeding in the Ministry of Labor and Employment, should be re-examined. It will be highly prejudicial to the
interests of the employer to impose on him the services of an employee who has been shown to be guilty of the charges that
warranted his dismissal from employment. Indeed, it will demoralize the rank and file if the undeserving, if not undesirable, remains
in the service.
....
However, the petitioner must nevertheless be held to account for failure to extend to private respondent his right to an investigation
before causing his dismissal. The rule is explicit as above discussed. The dismissal of an employee must be for just or authorized
cause and after due process. Petitioner committed an infraction of the second requirement. Thus, it must be imposed a sanction for
its failure to give a formal notice and conduct an investigation as required by law before dismissing petitioner from employment.
Considering the circumstances of this case petitioner must indemnify the private respondent the amount of P1,000.00. The measure
of this award depends on the facts of each case and the gravity of the omission committed by the employer.
The fines imposed for violations of the notice requirement have varied from P1,000.00[22] to P2,000.00[23] to P5,000.00[24] to P10,000.00.[25]
Need for Reexamining the Wenphil Doctrine
Today, we once again consider the question of appropriate sanctions for violations of the notice requirement in light of our experience during the last
decade or so with the Wenphil doctrine. The number of cases involving dismissals without the requisite notice to the employee, although effected for just or
authorized causes, suggests that the imposition of fine for violation of the notice requirement has not been effective in deterring violations of the notice
requirement. Justice Panganiban finds the monetary sanctions "too insignificant, too niggardly, and sometimes even too late." On the other hand, Justice
Puno says there has in effect been fostered a policy of "dismiss now, pay later" which moneyed employers find more convenient to comply with than the
requirement to serve a 30-day written notice (in the case of termination of employment for an authorized cause under Arts. 283-284) or to give notice and
hearing (in the case of dismissals for just causes under Art. 282).
For this reason, they regard any dismissal or layoff without the requisite notice to be null and void even though there are just or authorized causes for such
dismissal or layoff. Consequently, in their view, the employee concerned should be reinstated and paid backwages.
Validity of Petitioners Layoff Not Affected by Lack of Notice
We agree with our esteemed colleagues, Justices Puno and Panganiban, that we should rethink the sanction of fine for an employers disregard of the notice
requirement. We do not agree, however, that disregard of this requirement by an employer renders the dismissal or termination of employment null and
void. Such a stance is actually a reversion to the discredited pre-Wenphil rule of ordering an employee to be reinstated and paid backwages when it is
shown that he has not been given notice and hearing although his dismissal or layoff is later found to be for a just or authorized cause. Such rule was
abandoned in Wenphil because it is really unjust to require an employer to keep in his service one who is guilty, for example, of an attempt on the life of the
employer or the latters family, or when the employer is precisely retrenching in order to prevent losses.
The need is for a rule which, while recognizing the employees right to notice before he is dismissed or laid off, at the same time acknowledges the right of
the employer to dismiss for any of the just causes enumerated in Art. 282 or to terminate employment for any of the authorized causes mentioned in Arts.
283-284. If the Wenphil rule imposing a fine on an employer who is found to have dismissed an employee for cause without prior notice is deemed
ineffective in deterring employer violations of the notice requirement, the remedy is not to declare the dismissal void if there are just or valid grounds for
such dismissal or if the termination is for an authorized cause. That would be to uphold the right of the employee but deny the right of the employer to
dismiss for cause. Rather, the remedy is to order the payment to the employee of full backwages from the time of his dismissal until the court finds that the
dismissal was for a just cause. But, otherwise, his dismissal must be upheld and he should not be reinstated. This is because his dismissal is ineffectual.
For the same reason, if an employee is laid off for any of the causes in Arts. 283-284, i.e., installation of a labor-saving device, but the employer did not
give him and the DOLE a 30-day written notice of termination in advance, then the termination of his employment should be considered ineffectual and he
should be paid backwages. However, the termination of his employment should not be considered void but he should simply be paid separation pay as
provided in Art. 283 in addition to backwages.
Justice Puno argues that an employers failure to comply with the notice requirement constitutes a denial of the employees right to due process. Prescinding
from this premise, he quotes the statement of Chief Justice Concepcion in Vda. de Cuaycong v. Vda. de Sengbengco[26] that "acts of Congress, as well as
of the Executive, can deny due process only under the pain of nullity, and judicial proceedings suffering from the same flaw are subject to the same
sanction, any statutory provision to the contrary notwithstanding." Justice Puno concludes that the dismissal of an employee without notice and hearing,
even if for a just cause, as provided in Art. 282, or for an authorized cause, as provided in Arts. 283-284, is a nullity. Hence, even if just or authorized
causes exist, the employee should be reinstated with full back pay. On the other hand, Justice Panganiban quotes from the statement in People v. Bocar[27]
that "[w]here the denial of the fundamental right of due process is apparent, a decision rendered in disregard of that right is void for lack of jurisdiction."
Violation of Notice Requirement Not a Denial of Due Process
The cases cited by both Justices Puno and Panganiban refer, however, to the denial of due process by the State, which is not the case here. There are three
reasons why, on the other hand, violation by the employer of the notice requirement cannot be considered a denial of due process resulting in the nullity of
the employees dismissal or layoff.
The first is that the Due Process Clause of the Constitution is a limitation on governmental powers. It does not apply to the exercise of private power, such
as the termination of employment under the Labor Code. This is plain from the text of Art. III, 1 of the Constitution, viz.: "No person shall be deprived of
life, liberty, or property without due process of law. . . ." The reason is simple: Only the State has authority to take the life, liberty, or property of the

individual. The purpose of the Due Process Clause is to ensure that the exercise of this power is consistent with what are considered civilized methods.
The second reason is that notice and hearing are required under the Due Process Clause before the power of organized society are brought to bear upon the
individual. This is obviously not the case of termination of employment under Art. 283. Here the employee is not faced with an aspect of the adversary
system. The purpose for requiring a 30-day written notice before an employee is laid off is not to afford him an opportunity to be heard on any charge
against him, for there is none. The purpose rather is to give him time to prepare for the eventual loss of his job and the DOLE an opportunity to determine
whether economic causes do exist justifying the termination of his employment.
Even in cases of dismissal under Art. 282, the purpose for the requirement of notice and hearing is not to comply with Due Process Clause of the
Constitution. The time for notice and hearing is at the trial stage. Then that is the time we speak of notice and hearing as the essence of procedural due
process. Thus, compliance by the employer with the notice requirement before he dismisses an employee does not foreclose the right of the latter to
question the legality of his dismissal. As Art. 277(b) provides, "Any decision taken by the employer shall be without prejudice to the right of the worker to
contest the validity or legality of his dismissal by filing a complaint with the regional branch of the National Labor Relations Commission."
Indeed, to contend that the notice requirement in the Labor Code is an aspect of due process is to overlook the fact that Art. 283 had its origin in Art. 302 of
the Spanish Code of Commerce of 1882 which gave either party to the employer-employee relationship the right to terminate their relationship by giving
notice to the other one month in advance. In lieu of notice, an employee could be laid off by paying him a mesada equivalent to his salary for one month.
[28] This provision was repealed by Art. 2270 of the Civil Code, which took effect on August 30, 1950. But on June 12, 1954, R.A. No. 1052, otherwise
known as the Termination Pay Law, was enacted reviving the mesada. On June 21, 1957, the law was amended by R.A. No. 1787 providing for the giving
of advance notice or the payment of compensation at the rate of one-half month for every year of service.[29]
The Termination Pay Law was held not to be a substantive law but a regulatory measure, the purpose of which was to give the employer the opportunity to
find a replacement or substitute, and the employee the equal opportunity to look for another job or source of employment. Where the termination of
employment was for a just cause, no notice was required to be given to the employee.[30] It was only on September 4, 1981 that notice was required to be
given even where the dismissal or termination of an employee was for cause. This was made in the rules issued by the then Minister of Labor and
Employment to implement B.P. Blg. 130 which amended the Labor Code. And it was still much later when the notice requirement was embodied in the law
with the amendment of Art. 277(b) by R.A. No. 6715 on March 2, 1989. It cannot be that the former regime denied due process to the employee.
Otherwise, there should now likewise be a rule that, in case an employee leaves his job without cause and without prior notice to his employer, his act
should be void instead of simply making him liable for damages.
The third reason why the notice requirement under Art. 283 can not be considered a requirement of the Due Process Clause is that the employer cannot
really be expected to be entirely an impartial judge of his own cause. This is also the case in termination of employment for a just cause under Art. 282
(i.e., serious misconduct or willful disobedience by the employee of the lawful orders of the employer, gross and habitual neglect of duties, fraud or willful
breach of trust of the employer, commission of crime against the employer or the latters immediate family or duly authorized representatives, or other
analogous cases).
Justice Puno disputes this. He says that "statistics in the DOLE will prove that many cases have been won by employees before the grievance committees
manned by impartial judges of the company." The grievance machinery is, however, different because it is established by agreement of the employer and
the employees and composed of representatives from both sides. That is why, in Batangas Laguna Tayabas Bus Co. v. Court of Appeals,[31] which Justice
Puno cites, it was held that "Since the right of [an employee] to his labor is in itself a property and that the labor agreement between him and [his
employer] is the law between the parties, his summary and arbitrary dismissal amounted to deprivation of his property without due process of law." But
here we are dealing with dismissals and layoffs by employers alone, without the intervention of any grievance machinery. Accordingly in Montemayor v.
Araneta University Foundation,[32] although a professor was dismissed without a hearing by his university, his dismissal for having made homosexual
advances on a student was sustained, it appearing that in the NLRC, the employee was fully heard in his defense.
Lack of Notice Only Makes Termination Ineffectual
Not all notice requirements are requirements of due process. Some are simply part of a procedure to be followed before a right granted to a party can be
exercised. Others are simply an application of the Justinian precept, embodied in the Civil Code, [33] to act with justice, give everyone his due, and observe
honesty and good faith toward ones fellowmen. Such is the notice requirement in Arts. 282-283. The consequence of the failure either of the employer or
the employee to live up to this precept is to make him liable in damages, not to render his act (dismissal or resignation, as the case may be) void. The
measure of damages is the amount of wages the employee should have received were it not for the termination of his employment without prior notice. If
warranted, nominal and moral damages may also be awarded.
We hold, therefore, that, with respect to Art. 283 of the Labor Code, the employers failure to comply with the notice requirement does not constitute a
denial of due process but a mere failure to observe a procedure for the termination of employment which makes the termination of employment merely
ineffectual. It is similar to the failure to observe the provisions of Art. 1592, in relation to Art. 1191, of the Civil Code[34] in rescinding a contract for the
sale of immovable property. Under these provisions, while the power of a party to rescind a contract is implied in reciprocal obligations, nonetheless, in
cases involving the sale of immovable property, the vendor cannot exercise this power even though the vendee defaults in the payment of the price, except
by bringing an action in court or giving notice of rescission by means of a notarial demand.[35] Consequently, a notice of rescission given in the letter of
an attorney has no legal effect, and the vendee can make payment even after the due date since no valid notice of rescission has been given.[36]
Indeed, under the Labor Code, only the absence of a just cause for the termination of employment can make the dismissal of an employee illegal. This is
clear from Art. 279 which provides:
Security of Tenure. - In cases of regular employment, the employer shall not terminate the services of an employee except for a just
cause or when authorized by this Title. An employee who is unjustly dismissed from work shall be entitled to reinstatement without
loss of seniority rights and other privileges and to his full backwages, inclusive of allowances, and to his other benefits or their
monetary equivalent computed from the time his compensation was withheld from him up to the time of his actual reinstatement.
[37]
Thus, only if the termination of employment is not for any of the causes provided by law is it illegal and, therefore, the employee should be reinstated and
paid backwages. To contend, as Justices Puno and Panganiban do, that even if the termination is for a just or authorized cause the employee concerned
should be reinstated and paid backwages would be to amend Art. 279 by adding another ground for considering a dismissal illegal. What is more, it would
ignore the fact that under Art. 285, if it is the employee who fails to give a written notice to the employer that he is leaving the service of the latter, at least
one month in advance, his failure to comply with the legal requirement does not result in making his resignation void but only in making him liable for
damages.[38] This disparity in legal treatment, which would result from the adoption of the theory of the minority cannot simply be explained by invoking

President Ramon Magsaysays motto that "he who has less in life should have more in law." That would be a misapplication of this noble phrase originally
from Professor Thomas Reed Powell of the Harvard Law School.
Justice Panganiban cites Pepsi-Cola Bottling Co. v. NLRC,[39] in support of his view that an illegal dismissal results not only from want of legal cause but
also from the failure to observe "due process." The Pepsi-Cola case actually involved a dismissal for an alleged loss of trust and confidence which, as
found by the Court, was not proven. The dismissal was, therefore, illegal, not because there was a denial of due process, but because the dismissal was
without cause. The statement that the failure of management to comply with the notice requirement "taints the dismissal with illegality" was merely a
dictum thrown in as additional grounds for holding the dismissal to be illegal.
Given the nature of the violation, therefore, the appropriate sanction for the failure to give notice is the payment of backwages for the period when the
employee is considered not to have been effectively dismissed or his employment terminated. The sanction is not the payment alone of nominal damages as
Justice Vitug contends.
Unjust Results of Considering Dismissals/Layoffs Without Prior Notice As Illegal
The refusal to look beyond the validity of the initial action taken by the employer to terminate employment either for an authorized or just cause can result
in an injustice to the employer. For not giving notice and hearing before dismissing an employee, who is otherwise guilty of, say, theft, or even of an
attempt against the life of the employer, an employer will be forced to keep in his employ such guilty employee. This is unjust.
It is true the Constitution regards labor as "a primary social economic force." [40] But so does it declare that it "recognizes the indispensable role of the
private sector, encourages private enterprise, and provides incentives to needed investment."[41] The Constitution bids the State to "afford full protection to
labor."[42] But it is equally true that "the law, in protecting the rights of the laborer, authorizes neither oppression nor self-destruction of the employer."[43]
And it is oppression to compel the employer to continue in employment one who is guilty or to force the employer to remain in operation when it is not
economically in his interest to do so.
In sum, we hold that if in proceedings for reinstatement under Art. 283, it is shown that the termination of employment was due to an authorized cause,
then the employee concerned should not be ordered reinstated even though there is failure to comply with the 30-day notice requirement. Instead, he must
be granted separation pay in accordance with Art. 283, to wit:
In case of termination due to the installation of labor-saving devices or redundancy, the worker affected thereby shall be entitled to a
separation pay equivalent to at least his one (1) month pay or to at least one month for every year of service, whichever is higher. In
case of retrenchment to prevent losses and in cases of closures or cessation of operations of establishment or undertaking not due to
serious business losses or financial reverses, the separation pay shall be equivalent to one (1) month pay or at least one-half (1/2)
month pay for every year of service, whichever is higher. A fraction of at least six months shall be considered one (1) whole year.
If the employees separation is without cause, instead of being given separation pay, he should be reinstated. In either case, whether he is reinstated or only
granted separation pay, he should be paid full backwages if he has been laid off without written notice at least 30 days in advance.
On the other hand, with respect to dismissals for cause under Art. 282, if it is shown that the employee was dismissed for any of the just causes mentioned
in said Art. 282, then, in accordance with that article, he should not be reinstated. However, he must be paid backwages from the time his employment was
terminated until it is determined that the termination of employment is for a just cause because the failure to hear him before he is dismissed renders the
termination of his employment without legal effect.
WHEREFORE, the petition is GRANTED and the resolution of the National Labor Relations Commission is MODIFIED by ordering private respondent
Isetann Department Store, Inc. to pay petitioner separation pay equivalent to one (1) month pay for every year of service, his unpaid salary, and his
proportionate 13th month pay and, in addition, full backwages from the time his employment was terminated on October 11, 1991 up to the time the
decision herein becomes final. For this purpose, this case is REMANDED to the Labor Arbiter for computation of the separation pay, backwages, and other
monetary awards to petitioner.
SO ORDERED.

FACTS:
Serrano was a regular employee of Isetann Department Store as the head of Security Checker. In 1991, as a cost-cutting measure, Isetann phased
out its entire security section and engaged the services of an independent security agency. Petitioner filed a complaint for illegal dismissal among others.
Labor arbiter ruled in his favor as Isetann failed to establish that it had retrenched its security section to prevent or minimize losses to its business; that
private respondent failed to accord due process to petitioner; that private respondent failed to use reasonable standards in selecting employees whose
employment would be terminated. NLRC reversed the decision and ordered petitioner to be given separation pay.
ISSUE:
Whether or not the hiring of an independent security agency by the private respondent to replace its current security section a valid ground for
the dismissal of the employees classed under the latter.
RULING:
An employers good faith in implementing a redundancy program is not necessarily put in doubt by the availment of the services of an
independent contractor to replace the services of the terminated employees to promote economy and efficiency. Absent proof that management acted in a
malicious or arbitrary manner, the Court will not interfere with the exercise of judgment by an employer.
If termination of employment is not for any of the cause provided by law, it is illegal and the employee should be reinstated and paid
backwages. To contend that even if the termination is for a just cause, the employee concerned should be reinstated and paid backwages would be to amend
Art 279 by adding another ground for considering dismissal illegal.
If it is shown that the employee was dismissed for any of the causes mentioned in Art 282, the in accordance with that article, he should not be
reinstated but must be paid backwages from the time his employment was terminated until it is determined that the termination of employment is for a just
cause because the failure to hear him before he is dismissed renders the termination without legal effect.

EN BANC
JENNY M. AGABON and

G.R. No. 158693

VIRGILIO C. AGABON,
- versus NATIONAL LABOR RELATIONS
COMMISSION (NLRC), RIVIERA
HOME IMPROVEMENTS, INC.

Promulgated:

and VICENTE ANGELES,

November 17, 2004

x ---------------------------------------------------------------------------------------- x
DECISION
YNARES-SANTIAGO, J.:
This petition for review seeks to reverse the decision[1] of the Court of Appeals dated January 23, 2003, in CA-G.R. SP No. 63017, modifying the decision
of National Labor Relations Commission (NLRC) in NLRC-NCR Case No. 023442-00.
Private respondent Riviera Home Improvements, Inc. is engaged in the business of selling and installing ornamental and construction materials. It
employed petitioners Virgilio Agabon and Jenny Agabon as gypsum board and cornice installers on January 2, 1992[2] until February 23, 1999 when they
were dismissed for abandonment of work.
Petitioners then filed a complaint for illegal dismissal and payment of money claims[3] and on December 28, 1999, the Labor Arbiter rendered a decision
declaring the dismissals illegal and ordered private respondent to pay the monetary claims. The dispositive portion of the decision states:
WHEREFORE, premises considered, We find the termination of the complainants illegal. Accordingly, respondent is hereby ordered to pay them their
backwages up to November 29, 1999 in the sum of:
1. Jenny M. Agabon - P56, 231.93
2. Virgilio C. Agabon - 56, 231.93
and, in lieu of reinstatement to pay them their separation pay of one (1) month for every year of service from date of hiring up to November 29, 1999.
Respondent is further ordered to pay the complainants their holiday pay and service incentive leave pay for the years 1996, 1997 and 1998 as well as their
premium pay for holidays and rest days and Virgilio Agabons 13th month pay differential amounting to TWO THOUSAND ONE HUNDRED FIFTY
(P2,150.00) Pesos, or the aggregate amount of ONE HUNDRED TWENTY ONE THOUSAND SIX HUNDRED SEVENTY EIGHT & 93/100
(P121,678.93) Pesos for Jenny Agabon, and ONE HUNDRED TWENTY THREE THOUSAND EIGHT HUNDRED TWENTY EIGHT & 93/100
(P123,828.93) Pesos for Virgilio Agabon, as per attached computation of Julieta C. Nicolas, OIC, Research and Computation Unit, NCR.
SO ORDERED.[4]
On appeal, the NLRC reversed the Labor Arbiter because it found that the petitioners had abandoned their work, and were not entitled to backwages and
separation pay. The other money claims awarded by the Labor Arbiter were also denied for lack of evidence.[5]
Upon denial of their motion for reconsideration, petitioners filed a petition for certiorari with the Court of Appeals.
The Court of Appeals in turn ruled that the dismissal of the petitioners was not illegal because they had abandoned their employment but ordered the
payment of money claims. The dispositive portion of the decision reads:
WHEREFORE, the decision of the National Labor Relations Commission is REVERSED only insofar as it dismissed petitioners money claims. Private
respondents are ordered to pay petitioners holiday pay for four (4) regular holidays in 1996, 1997, and 1998, as well as their service incentive leave pay for
said years, and to pay the balance of petitioner Virgilio Agabons 13th month pay for 1998 in the amount of P2,150.00.
SO ORDERED.[6]
Hence, this petition for review on the sole issue of whether petitioners were illegally dismissed.[7]
Petitioners assert that they were dismissed because the private respondent refused to give them assignments unless they agreed to work on a pakyaw basis
when they reported for duty on February 23, 1999. They did not agree on this arrangement because it would mean losing benefits as Social Security
System (SSS) members. Petitioners also claim that private respondent did not comply with the twin requirements of notice and hearing.[8]
Private respondent, on the other hand, maintained that petitioners were not dismissed but had abandoned their work.[9] In fact, private respondent sent two
letters to the last known addresses of the petitioners advising them to report for work. Private respondents manager even talked to petitioner Virgilio
Agabon by telephone sometime in June 1999 to tell him about the new assignment at Pacific Plaza Towers involving 40,000 square meters of cornice
installation work. However, petitioners did not report for work because they had subcontracted to perform installation work for another company.
Petitioners also demanded for an increase in their wage to P280.00 per day. When this was not granted, petitioners stopped reporting for work and filed the
illegal dismissal case.[10]
It is well-settled that findings of fact of quasi-judicial agencies like the NLRC are accorded not only respect but even finality if the findings are supported

by substantial evidence. This is especially so when such findings were affirmed by the Court of Appeals. [11] However, if the factual findings of the NLRC
and the Labor Arbiter are conflicting, as in this case, the reviewing court may delve into the records and examine for itself the questioned findings.[12]
Accordingly, the Court of Appeals, after a careful review of the facts, ruled that petitioners dismissal was for a just cause. They had abandoned their
employment and were already working for another employer.
To dismiss an employee, the law requires not only the existence of a just and valid cause but also enjoins the employer to give the employee the
opportunity to be heard and to defend himself.[13] Article 282 of the Labor Code enumerates the just causes for termination by the employer: (a) serious
misconduct or willful disobedience by the employee of the lawful orders of his employer or the latters representative in connection with the employees
work; (b) gross and habitual neglect by the employee of his duties; (c) fraud or willful breach by the employee of the trust reposed in him by his employer
or his duly authorized representative; (d) commission of a crime or offense by the employee against the person of his employer or any immediate member
of his family or his duly authorized representative; and (e) other causes analogous to the foregoing.
Abandonment is the deliberate and unjustified refusal of an employee to resume his employment.[14] It is a form of neglect of duty, hence, a just cause for
termination of employment by the employer.[15] For a valid finding of abandonment, these two factors should be present: (1) the failure to report for work
or absence without valid or justifiable reason; and (2) a clear intention to sever employer-employee relationship, with the second as the more determinative
factor which is manifested by overt acts from which it may be deduced that the employees has no more intention to work. The intent to discontinue the
employment must be shown by clear proof that it was deliberate and unjustified.[16]
In February 1999, petitioners were frequently absent having subcontracted for an installation work for another company. Subcontracting for another
company clearly showed the intention to sever the employer-employee relationship with private respondent. This was not the first time they did this. In
January 1996, they did not report for work because they were working for another company. Private respondent at that time warned petitioners that they
would be dismissed if this happened again. Petitioners disregarded the warning and exhibited a clear intention to sever their employer-employee
relationship. The record of an employee is a relevant consideration in determining the penalty that should be meted out to him.[17]
In Sandoval Shipyard v. Clave,[18] we held that an employee who deliberately absented from work without leave or permission from his employer, for the
purpose of looking for a job elsewhere, is considered to have abandoned his job. We should apply that rule with more reason here where petitioners were
absent because they were already working in another company.
The law imposes many obligations on the employer such as providing just compensation to workers, observance of the procedural requirements of notice
and hearing in the termination of employment. On the other hand, the law also recognizes the right of the employer to expect from its workers not only
good performance, adequate work and diligence, but also good conduct[19] and loyalty. The employer may not be compelled to continue to employ such
persons whose continuance in the service will patently be inimical to his interests.[20]
After establishing that the terminations were for a just and valid cause, we now determine if the procedures for dismissal were observed.
The procedure for terminating an employee is found in Book VI, Rule I, Section 2(d) of the Omnibus Rules Implementing the Labor Code:
Standards of due process: requirements of notice. In all cases of termination of employment, the following standards of due process shall be substantially
observed:
I. For termination of employment based on just causes as defined in Article 282 of the Code:
(a) A written notice served on the employee specifying the ground or grounds for termination, and giving to said employee reasonable opportunity within
which to explain his side;
(b) A hearing or conference during which the employee concerned, with the assistance of counsel if the employee so desires, is given opportunity to
respond to the charge, present his evidence or rebut the evidence presented against him; and
(c) A written notice of termination served on the employee indicating that upon due consideration of all the circumstances, grounds have been established
to justify his termination.
In case of termination, the foregoing notices shall be served on the employees last known address.
Dismissals based on just causes contemplate acts or omissions attributable to the employee while dismissals based on authorized causes involve grounds
under the Labor Code which allow the employer to terminate employees. A termination for an authorized cause requires payment of separation pay. When
the termination of employment is declared illegal, reinstatement and full backwages are mandated under Article 279. If reinstatement is no longer possible
where the dismissal was unjust, separation pay may be granted.
Procedurally, (1) if the dismissal is based on a just cause under Article 282, the employer must give the employee two written notices and a hearing or
opportunity to be heard if requested by the employee before terminating the employment: a notice specifying the grounds for which dismissal is sought a
hearing or an opportunity to be heard and after hearing or opportunity to be heard, a notice of the decision to dismiss; and (2) if the dismissal is based on
authorized causes under Articles 283 and 284, the employer must give the employee and the Department of Labor and Employment written notices 30 days
prior to the effectivity of his separation.
From the foregoing rules four possible situations may be derived: (1) the dismissal is for a just cause under Article 282 of the Labor Code, for an
authorized cause under Article 283, or for health reasons under Article 284, and due process was observed; (2) the dismissal is without just or authorized
cause but due process was observed; (3) the dismissal is without just or authorized cause and there was no due process; and (4) the dismissal is for just or
authorized cause but due process was not observed.
In the first situation, the dismissal is undoubtedly valid and the employer will not suffer any liability.
In the second and third situations where the dismissals are illegal, Article 279 mandates that the employee is entitled to reinstatement without loss of
seniority rights and other privileges and full backwages, inclusive of allowances, and other benefits or their monetary equivalent computed from the time
the compensation was not paid up to the time of actual reinstatement.

In the fourth situation, the dismissal should be upheld. While the procedural infirmity cannot be cured, it should not invalidate the dismissal. However, the
employer should be held liable for non-compliance with the procedural requirements of due process.
The present case squarely falls under the fourth situation. The dismissal should be upheld because it was established that the petitioners abandoned their
jobs to work for another company. Private respondent, however, did not follow the notice requirements and instead argued that sending notices to the last
known addresses would have been useless because they did not reside there anymore. Unfortunately for the private respondent, this is not a valid excuse
because the law mandates the twin notice requirements to the employees last known address.[21] Thus, it should be held liable for non-compliance with
the procedural requirements of due process.
A review and re-examination of the relevant legal principles is appropriate and timely to clarify the various rulings on employment termination in the light
of Serrano v. National Labor Relations Commission.[22]
Prior to 1989, the rule was that a dismissal or termination is illegal if the employee was not given any notice. In the 1989 case of Wenphil Corp. v. National
Labor Relations Commission,[23] we reversed this long-standing rule and held that the dismissed employee, although not given any notice and hearing,
was not entitled to reinstatement and backwages because the dismissal was for grave misconduct and insubordination, a just ground for termination under
Article 282. The employee had a violent temper and caused trouble during office hours, defying superiors who tried to pacify him. We concluded that
reinstating the employee and awarding backwages may encourage him to do even worse and will render a mockery of the rules of discipline that employees
are required to observe.[24] We further held that:
Under the circumstances, the dismissal of the private respondent for just cause should be maintained. He has no right to return to his former employment.
However, the petitioner must nevertheless be held to account for failure to extend to private respondent his right to an investigation before causing his
dismissal. The rule is explicit as above discussed. The dismissal of an employee must be for just or authorized cause and after due process. Petitioner
committed an infraction of the second requirement. Thus, it must be imposed a sanction for its failure to give a formal notice and conduct an investigation
as required by law before dismissing petitioner from employment. Considering the circumstances of this case petitioner must indemnify the private
respondent the amount of P1,000.00. The measure of this award depends on the facts of each case and the gravity of the omission committed by the
employer.[25]
The rule thus evolved: where the employer had a valid reason to dismiss an employee but did not follow the due process requirement, the dismissal may be
upheld but the employer will be penalized to pay an indemnity to the employee. This became known as the Wenphil or Belated Due Process Rule.
On January 27, 2000, in Serrano, the rule on the extent of the sanction was changed. We held that the violation by the employer of the notice requirement
in termination for just or authorized causes was not a denial of due process that will nullify the termination. However, the dismissal is ineffectual and the
employer must pay full backwages from the time of termination until it is judicially declared that the dismissal was for a just or authorized cause.
The rationale for the re-examination of the Wenphil doctrine in Serrano was the significant number of cases involving dismissals without requisite notices.
We concluded that the imposition of penalty by way of damages for violation of the notice requirement was not serving as a deterrent. Hence, we now
required payment of full backwages from the time of dismissal until the time the Court finds the dismissal was for a just or authorized cause.
Serrano was confronting the practice of employers to dismiss now and pay later by imposing full backwages.
We believe, however, that the ruling in Serrano did not consider the full meaning of Article 279 of the Labor Code which states:
ART. 279. Security of Tenure. In cases of regular employment, the employer shall not terminate the services of an employee except for a just cause or
when authorized by this Title. An employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and other
privileges and to his full backwages, inclusive of allowances, and to his other benefits or their monetary equivalent computed from the time his
compensation was withheld from him up to the time of his actual reinstatement.
This means that the termination is illegal only if it is not for any of the justified or authorized causes provided by law. Payment of backwages and other
benefits, including reinstatement, is justified only if the employee was unjustly dismissed.
The fact that the Serrano ruling can cause unfairness and injustice which elicited strong dissent has prompted us to revisit the doctrine.
To be sure, the Due Process Clause in Article III, Section 1 of the Constitution embodies a system of rights based on moral principles so deeply imbedded
in the traditions and feelings of our people as to be deemed fundamental to a civilized society as conceived by our entire history. Due process is that which
comports with the deepest notions of what is fair and right and just.[26] It is a constitutional restraint on the legislative as well as on the executive and
judicial powers of the government provided by the Bill of Rights.
Due process under the Labor Code, like Constitutional due process, has two aspects: substantive, i.e., the valid and authorized causes of employment
termination under the Labor Code; and procedural, i.e., the manner of dismissal. Procedural due process requirements for dismissal are found in the
Implementing Rules of P.D. 442, as amended, otherwise known as the Labor Code of the Philippines in Book VI, Rule I, Sec. 2, as amended by
Department Order Nos. 9 and 10.[27] Breaches of these due process requirements violate the Labor Code. Therefore statutory due process should be
differentiated from failure to comply with constitutional due process.
Constitutional due process protects the individual from the government and assures him of his rights in criminal, civil or administrative proceedings; while
statutory due process found in the Labor Code and Implementing Rules protects employees from being unjustly terminated without just cause after notice
and hearing.
In Sebuguero v. National Labor Relations Commission,[28] the dismissal was for a just and valid cause but the employee was not accorded due process.
The dismissal was upheld by the Court but the employer was sanctioned. The sanction should be in the nature of indemnification or penalty, and depends
on the facts of each case and the gravity of the omission committed by the employer.
In Nath v. National Labor Relations Commission,[29] it was ruled that even if the employee was not given due process, the failure did not operate to
eradicate the just causes for dismissal. The dismissal being for just cause, albeit without due process, did not entitle the employee to reinstatement,
backwages, damages and attorneys fees.

Mr. Justice Jose C. Vitug, in his separate opinion in MGG Marine Services, Inc. v. National Labor Relations Commission,[30] which opinion he reiterated
in Serrano, stated:
C. Where there is just cause for dismissal but due process has not been properly observed by an employer, it would not be right to order either the
reinstatement of the dismissed employee or the payment of backwages to him. In failing, however, to comply with the procedure prescribed by law in
terminating the services of the employee, the employer must be deemed to have opted or, in any case, should be made liable, for the payment of separation
pay. It might be pointed out that the notice to be given and the hearing to be conducted generally constitute the two-part due process requirement of law to
be accorded to the employee by the employer. Nevertheless, peculiar circumstances might obtain in certain situations where to undertake the above steps
would be no more than a useless formality and where, accordingly, it would not be imprudent to apply the res ipsa loquitur rule and award, in lieu of
separation pay, nominal damages to the employee. x x x.[31]
After carefully analyzing the consequences of the divergent doctrines in the law on employment termination, we believe that in cases involving dismissals
for cause but without observance of the twin requirements of notice and hearing, the better rule is to abandon the Serrano doctrine and to follow Wenphil
by holding that the dismissal was for just cause but imposing sanctions on the employer. Such sanctions, however, must be stiffer than that imposed in
Wenphil. By doing so, this Court would be able to achieve a fair result by dispensing justice not just to employees, but to employers as well.
The unfairness of declaring illegal or ineffectual dismissals for valid or authorized causes but not complying with statutory due process may have farreaching consequences.
This would encourage frivolous suits, where even the most notorious violators of company policy are rewarded by invoking due process. This also creates
absurd situations where there is a just or authorized cause for dismissal but a procedural infirmity invalidates the termination. Let us take for example a
case where the employee is caught stealing or threatens the lives of his co-employees or has become a criminal, who has fled and cannot be found, or
where serious business losses demand that operations be ceased in less than a month. Invalidating the dismissal would not serve public interest. It could
also discourage investments that can generate employment in the local economy.
The constitutional policy to provide full protection to labor is not meant to be a sword to oppress employers. The commitment of this Court to the cause of
labor does not prevent us from sustaining the employer when it is in the right, as in this case.[32] Certainly, an employer should not be compelled to pay
employees for work not actually performed and in fact abandoned.
The employer should not be compelled to continue employing a person who is admittedly guilty of misfeasance or malfeasance and whose continued
employment is patently inimical to the employer. The law protecting the rights of the laborer authorizes neither oppression nor self-destruction of the
employer.[33]
It must be stressed that in the present case, the petitioners committed a grave offense, i.e., abandonment, which, if the requirements of due process were
complied with, would undoubtedly result in a valid dismissal.
An employee who is clearly guilty of conduct violative of Article 282 should not be protected by the Social Justice Clause of the Constitution. Social
justice, as the term suggests, should be used only to correct an injustice. As the eminent Justice Jose P. Laurel observed, social justice must be founded on
the recognition of the necessity of interdependence among diverse units of a society and of the protection that should be equally and evenly
extended to all groups as a combined force in our social and economic life, consistent with the fundamental and paramount objective of the state of
promoting the health, comfort, and quiet of all persons, and of bringing about the greatest good to the greatest number.[34]
This is not to say that the Court was wrong when it ruled the way it did in Wenphil, Serrano and related cases. Social justice is not based on rigid
formulas set in stone. It has to allow for changing times and circumstances.
Justice Isagani Cruz strongly asserts the need to apply a balanced approach to labor-management relations and dispense justice with an even hand in every
case:
We have repeatedly stressed that social justice or any justice for that matter is for the deserving, whether he be a millionaire in his mansion or a pauper in
his hovel. It is true that, in case of reasonable doubt, we are to tilt the balance in favor of the poor to whom the Constitution fittingly extends its sympathy
and compassion. But never is it justified to give preference to the poor simply because they are poor, or reject the rich simply because they are rich, for
justice must always be served for the poor and the rich alike, according to the mandate of the law.[35]
Justice in every case should only be for the deserving party. It should not be presumed that every case of illegal dismissal would automatically be decided
in favor of labor, as management has rights that should be fully respected and enforced by this Court. As interdependent and indispensable partners in
nation-building, labor and management need each other to foster productivity and economic growth; hence, the need to weigh and balance the rights and
welfare of both the employee and employer.
Where the dismissal is for a just cause, as in the instant case, the lack of statutory due process should not nullify the dismissal, or render it illegal, or
ineffectual. However, the employer should indemnify the employee for the violation of his statutory rights, as ruled in Reta v. National Labor Relations
Commission.[36] The indemnity to be imposed should be stiffer to discourage the abhorrent practice of dismiss now, pay later, which we sought to deter in
the Serrano ruling. The sanction should be in the nature of indemnification or penalty and should depend on the facts of each case, taking into special
consideration the gravity of the due process violation of the employer.
Under the Civil Code, nominal damages is adjudicated in order that a right of the plaintiff, which has been violated or invaded by the defendant, may be
vindicated or recognized, and not for the purpose of indemnifying the plaintiff for any loss suffered by him.[37]
As enunciated by this Court in Viernes v. National Labor Relations Commissions,[38] an employer is liable to pay indemnity in the form of nominal
damages to an employee who has been dismissed if, in effecting such dismissal, the employer fails to comply with the requirements of due process. The
Court, after considering the circumstances therein, fixed the indemnity at P2,590.50, which was equivalent to the employees one month salary. This
indemnity is intended not to penalize the employer but to vindicate or recognize the employees right to statutory due process which was violated by the
employer.[39]
The violation of the petitioners right to statutory due process by the private respondent warrants the payment of indemnity in the form of nominal damages.

The amount of such damages is addressed to the sound discretion of the court, taking into account the relevant circumstances.[40] Considering the
prevailing circumstances in the case at bar, we deem it proper to fix it at P30,000.00. We believe this form of damages would serve to deter employers
from future violations of the statutory due process rights of employees. At the very least, it provides a vindication or recognition of this fundamental right
granted to the latter under the Labor Code and its Implementing Rules.
Private respondent claims that the Court of Appeals erred in holding that it failed to pay petitioners holiday pay, service incentive leave pay and 13 th month
pay.
We are not persuaded.
We affirm the ruling of the appellate court on petitioners money claims. Private respondent is liable for petitioners holiday pay, service incentive leave pay
and 13th month pay without deductions.
As a general rule, one who pleads payment has the burden of proving it. Even where the employee must allege non-payment, the general rule is that the
burden rests on the employer to prove payment, rather than on the employee to prove non-payment. The reason for the rule is that the pertinent personnel
files, payrolls, records, remittances and other similar documents which will show that overtime, differentials, service incentive leave and other claims of
workers have been paid are not in the possession of the worker but in the custody and absolute control of the employer.[41]
In the case at bar, if private respondent indeed paid petitioners holiday pay and service incentive leave pay, it could have easily presented documentary
proofs of such monetary benefits to disprove the claims of the petitioners. But it did not, except with respect to the 13 th month pay wherein it presented
cash vouchers showing payments of the benefit in the years disputed.[42] Allegations by private respondent that it does not operate during holidays and
that it allows its employees 10 days leave with pay, other than being self-serving, do not constitute proof of payment. Consequently, it failed to discharge
the onus probandi thereby making it liable for such claims to the petitioners.
Anent the deduction of SSS loan and the value of the shoes from petitioner Virgilio Agabons 13 th month pay, we find the same to be unauthorized. The
evident intention of Presidential Decree No. 851 is to grant an additional income in the form of the 13th month pay to employees not already receiving the
same[43] so as to further protect the level of real wages from the ravages of world-wide inflation. [44] Clearly, as additional income, the 13 th month pay is
included in the definition of wage under Article 97(f) of the Labor Code, to wit:
(f) Wage paid to any employee shall mean the remuneration or earnings, however designated, capable of being expressed in terms of money whether fixed
or ascertained on a time, task, piece , or commission basis, or other method of calculating the same, which is payable by an employer to an employee under
a written or unwritten contract of employment for work done or to be done, or for services rendered or to be rendered and includes the fair and reasonable
value, as determined by the Secretary of Labor, of board, lodging, or other facilities customarily furnished by the employer to the employee
from which an employer is prohibited under Article 113[45] of the same Code from making any deductions without the employees knowledge and consent.
In the instant case, private respondent failed to show that the deduction of the SSS loan and the value of the shoes from petitioner Virgilio Agabons 13 th
month pay was authorized by the latter. The lack of authority to deduct is further bolstered by the fact that petitioner Virgilio Agabon included the same as
one of his money claims against private respondent.
The Court of Appeals properly reinstated the monetary claims awarded by the Labor Arbiter ordering the private respondent to pay each of the petitioners
holiday pay for four regular holidays from 1996 to 1998, in the amount of P6,520.00, service incentive leave pay for the same period in the amount of
P3,255.00 and the balance of Virgilio Agabons thirteenth month pay for 1998 in the amount of P2,150.00.
WHEREFORE, in view of the foregoing, the petition is DENIED. The decision of the Court of Appeals dated January 23, 2003, in CA-G.R. SP No.
63017, finding that petitioners Jenny and Virgilio Agabon abandoned their work, and ordering private respondent to pay each of the petitioners holiday pay
for four regular holidays from 1996 to 1998, in the amount of P6,520.00, service incentive leave pay for the same period in the amount of P3,255.00 and
the balance of Virgilio Agabons thirteenth month pay for 1998 in the amount of P2,150.00 is AFFIRMED with the MODIFICATION that private
respondent Riviera Home Improvements, Inc. is further ORDERED to pay each of the petitioners the amount of P30,000.00 as nominal damages for noncompliance with statutory due process.
No costs.
SO ORDERED.

FACTS:
Petitioners were employed by Riviera Home as gypsum board and cornice installers from January 1992 to February 23, 1999 when they were
dismissed for abandonment of work. Petitioners filed a complaint for illegal dismissal and was decided in their favor by the Labor Arbiter. Riviera appealed
to the NLRC contending just cause for the dismissal because of petitioners abandonment of work. NLRC ruled there was just cause and petitioners were
not entitled to backwages and separation pay. The CA in turn ruled that the dismissal was not illegal because they have abandoned their work but ordered
the payment of money claims.
ISSUE:
Whether or not petitioners were illegally dismissed.
RULING:
To dismiss an employee, the law required not only the existence of a just and valid cause but also enjoins the employer to give the employee the
right to be heard and to defend himself. Abandonment is the deliberate and unjustified refusal of an employee to resume his employment. For a valid
finding or abandonment, two factors are considered: failure to report for work without a valid reason; and, a clear intention to sever employer-employee
relationship with the second as the more determinative factor which is manifested by overt acts from which it may be deduced that the employees has no
more
intention
to
work.

Where the employer had a valid reason to dismiss an employee but did not follow the due process requirement, the dismissal may be upheld but
the employer will be penalized to pay an indemnity to the employee. This became known as the Wenphil Doctrine of the Belated Due process Rule.
Art. 279 means that the termination is illegal if it is not for any of the justifiable or authorized by law. Where the dismissal is for a just cause, the
lack of statutory due process should not nullify the dismissal but the employer should indemnify the employee for the violation of his statutory rights. The
indemnity should be stiffer to discourage the abhorrent practice of dismiss now, pay later which we sought to deter in Serrano ruling. The violation of
employees rights warrants the payment of nominal damages.